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Postal Explorer > Publication 417 - Nonprofit Standard Mail Eligibility > 6 Content-Based Restrictions > 6-3 Six-Step Process
6-3 Six-Step Process
6-3.1 Step 1: Examine Mailpiece for Products
Examine the mailpiece for products. Consider these two conditions and
proceed as follows:
• If the mailpiece is a product or contains a product, go to step 2.
• If the mailpiece is not a product and does not contain a product, the
content-based restrictions for products do not apply. You must next
determine whether the mailpiece contains any advertising (discussed in
steps 3 through 6). Skip step 2 and go to step 3.
Under the law, the restrictions on mailing products at the nonprofit rates have
an extremely broad reach. These restrictions can apply to merchandise,
publications (such as books), and some periodical publications. For a
discussion about the general provisions for mailing a product as well as the
specific provision for mailing a periodical publication, see step 2.
A front-end premium is an item that an organization mails with a solicitation
requesting a donation. A back-end premium is an item that an organization
mails in return for a donation previously made to the organization.
Even though these premiums are usually connected with a donation to the
authorized organization, they must be treated like any other product to
determine eligibility for mailing at the nonprofit rates.
Examples: Product Rules Apply
For fundraising, authorized organization A sends a front-end
premium - a mailpiece containing a box of greeting cards and a letter
stating: "These cards are yours to keep. We ask that you consider
sending a small donation to our organization." The greeting cards are
considered a product. The product rules (steps 1 and 2) must be
applied.
Organization B sends a letter to members seeking donations and
stating: "Those sending $50 will receive a box of greeting cards." The
greeting cards are called a back-end premium. If the greeting cards are
mailed at the nonprofit rates, the product rules must be applied. (For
consideration whether the solicitation letter is considered an
advertisement, see steps 3 through 6.)
The product rules consider material produced by the authorized organization
as well as material produced by third parties, including other persons or
organizations (whether for-profit or nonprofit organizations).
A publication is considered a product if it is sold or has a listed price or
represented value. The following examples can help you determine when
printed matter is considered a product.
Example: Product Rules Apply
Authorized organization B prints and distributes a quarterly publication.
The publication is subsidized by membership dues, sold on
newsstands, and printed with a cover price. The publication is
considered a product because it is sold and has a cover price. The
product rules (steps 1 and 2) must be applied.
Examples: Product Rules Do Not Apply
Every 2 months, authorized organization C mails a four-page newsletter
to its members. This newsletter is not sold either on newsstands or by
application of part of membership dues, and it does not bear a listed
price. The newsletter is not considered a product. The product rules
(steps 1 and 2) do not apply.
For fundraising, authorized organization D mails a catalog offering
several items and includes information for ordering these items. The
catalog itself is not sold and has no listed price. The catalog is not
considered a product. The product rules (steps 1 and 2) do not apply.
6-3.2 Step 2: Determine If Products Meet Statutory
Provisions
Determine whether all products to be mailed meet one of the three statutory
provisions listed in 6-3.2.2. Consider these two conditions and proceed as
follows:
• If one or more of the products do not meet any statutory provisions, the
mailpiece is ineligible for mailing at the nonprofit rates.
• If all products meet at least one statutory provision, go to step 3.
For a product to be eligible for mailing at the nonprofit rates, it must meet one
of these three statutory provisions:
• A low-cost item purchased or produced by the organization.
• A gift or donation received by the authorized organization.
• The organization's own publication that meets the basic eligibility
criteria for a Periodicals publication.
As explained in 6-1.4, the eligibility standards for products are different than
those for advertisements for products and services. Unlike advertisements for
products and services, it is irrelevant whether the product is substantially
related to one or more of the authorized organization's purposes or meets
any of the other eligibility standards for advertisements. If the product meets
one of these three statutory provisions, the product must still be examined to
determine whether it contains advertising and whether the content-based
restrictions for advertisements apply (steps 3 through 6).
The determination of whether an item is considered a low-cost item -
whether purchased or made by the organization - is based on the actual
cost to the authorized organization or on whose behalf the product is
distributed. If the organization subsequently resells the item, the price it
seeks is irrelevant to whether it is considered to be "low cost" for purposes of
this test.
The term low-cost item is defined in 26 U.S.C. 513(h)(2) of the Internal
Revenue Code. Effective January 1, 2006, low-cost items were items costing
no more than $8.60. At the beginning of each calendar year, the value of
low-cost items is adjusted for changes in the cost of living. This information is
published in the Internal Revenue Service's Internal Revenue Bulletin and,
subsequently, in the Postal Bulletin and DMM.
Examples: Low-Cost Items
Authorized organization A prepares a mailpiece that contains a
paperback book bought for $3. The book is eligible for mailing at the
nonprofit rates - if it does not contain ineligible advertisements -
because it meets the statutory product provision for low-cost items. It is
irrelevant whether the book is related to A's primary purpose.
Authorized university U buys books for $20 each and plans to mail
them to alumni. The book is ineligible for mailing at the nonprofit rates
because it does not meet the statutory product provision for low-cost
items.
Authorized college C buys for $3 each canvas tote bags bearing the
college logo. College C plans to mail the tote bags to its alumni, each of
whom pays the college $10 for the bag. The tote bag is eligible for the
nonprofit rates because it meets the statutory product provision for
low-cost items. The amount that an authorized organization pays for an
item - not the amount at which the organization sells the item -
determines whether an item is a low-cost item.
Authorized fraternal organization F buys materials to make notebooks.
The notebooks cost organization F about $2 each, including labor,
materials, and overhead expenses, making it a low-cost item. (If an
authorized organization makes the product itself, the costs incurred by
the organization determine whether the product is a low-cost item.) The
notebook is eligible for the nonprofit rates because it meets the
statutory product provision for low-cost items.
Authorized organization C sends a front-end premium - that is, a
mailpiece that requests a donation and contains a box of greeting
cards. The boxes of greeting cards cost the organization $3 each. The
product is eligible for mailing at the nonprofit rates because it meets the
statutory product provision for low-cost items.
To qualify as a gift or donated item, the item must be obtained by the
authorized organization at no cost. The actual cost to the donor is not
considered. If the authorized organization, however, directly or indirectly
compensates a third party, the item may not be considered a gift or donated
item.
Example: Donated Item
Authorized organization C receives a donation of raincoats. The donor
paid $15 for each raincoat. The raincoat is eligible for mailing at the
nonprofit rates because it meets the statutory product provision for
donated items even though the donor paid more than $8.60.
Periodical publications may be considered products if they are sold or have a
listed price or represented value. By law, a periodical publication of an
authorized organization is eligible for mailing at the nonprofit rates, provided
that the publication does not contain an advertisement that is ineligible for
mailing at these rates. To qualify as a periodical publication, the publication
must meet these criteria:
• Have a title.
• Be published at regular intervals of at least four times a year.
• Be formed of printed sheets.
• Have an identification statement.
• Have a known office of publication.
• Meet the eligibility requirements prescribed for one of the Periodicals
categories (e.g., a general publication, a requester publication, or a
publication of an institution or society).
• Be eligible for mailing as Standard Mail matter.
A periodical may also qualify for mailing at the nonprofit rates as a product if
it is a low-cost item or a donated item. Because most periodicals are likely to
be low-cost items, consider that statutory provision first before examining the
publication for the periodical publication criteria.
Example: Low-Cost Publication
Authorized organization Q produces a publication twice a year that is
available to subscribers at an annual rate of $15. The publication
contains no ineligible advertisements. The publication is considered a
product because it is sold, but it does not meet the criteria for a
periodical publication exemption because the publication is not
published at least four times a year (see 6-3.2.5 for other
requirements). Organization Q's cost of producing the publication,
however, is only $1 a copy. The publication is eligible for mailing at the
nonprofit rates because it meets the statutory product provision for
low-cost items.
6-3.3 Step 3: Examine Mailpiece for Advertisements
Examine the mailpiece (including any product) to determine whether it
contains any printed or other matter that can be considered advertising for a
product or service. Consider these two conditions and proceed as follows:
• If the mailpiece contains no advertising, the content-based restrictions
for advertisements do not apply and the mailpiece may be eligible for
mailing at the nonprofit rates.
• If the mailpiece contains advertising for a product or service, apply the
appropriate test to determine whether the mailpiece qualifies for the
nonprofit rates. (A conclusion that a mailpiece contains advertising
does not disqualify it from being mailed at the nonprofit rates.) Go to
step 4.
As used in this publication, the terms advertising and advertisement mean
any thing that "advertises, promotes, offers, or, for a fee or consideration,
recommends, describes, or announces the availability of any product or
service," as defined in 39 U.S.C. 3626(j).
Under the law, the advertising restrictions have an extremely broad reach.
The content-based restrictions for advertisements apply to written and other
material that promotes any product or service. These restrictions include the
authorized organization's advertising of its own products and services as well
as third-party advertising (for example, advertising for products or services of
other persons, companies, or organizations).
Postal standards provide further guidance on what is considered to be
advertising:
• All material for the publication of which a valuable consideration is paid,
accepted, or promised that calls attention to something to get people to
buy it, sell it, seek it, or support it.
• Reading matter or other material for the publication of which an
advertising rate is charged.
• Articles, items, and notices in the form of reading matter inserted by
custom or understanding that textual matter is to be inserted for the
advertiser or the advertiser's products in the publication in which a
display advertisement appears.
• A newspaper's or periodical's advertisement of its own services, issues,
or any other business of the publisher, whether in display advertising or
reading matter.
Examples: Listing Considered As Advertising
If an authorized educational organization advertises a seminar and
states that the fee may be paid using the organization's affinity card,
the announcement is considered an advertisement for the seminar and
for the affinity card. Because the statement announces the availability
and discusses potential uses of the organization's affinity card to get
people to use it, the announcement must be considered an
advertisement.
For fundraising, authorized organization Y sends members a mailpiece
that includes this message: "We are selling delicious ABC Candy for
only $5 per box for members only. Please call Jane Jones at 111-1111
with your order." Because the message contains promotional material
describing the candy as "delicious ... only $5," the message is
considered an advertisement.
Authorized organization X distributes information stating that it will host
an educational seminar at a hotel (and includes the hotel's name,
address, and room rates for those who may participate in the seminar).
The information is considered advertising for the seminar because it is
an attempt to get support for the seminar. The information is not
considered an advertisement for the hotel unless the authorized
organization receives consideration for publishing the information.
Authorized organization X will host a meeting at a hotel and includes in
the organization's mailpiece a brochure received from the hotel and for
which the qualified organization is compensated by the hotel to
distribute at the nonprofit rates. The brochure is considered an
advertisement for the hotel because the hotel paid to have the
information distributed. In addition to the content-based restrictions for
advertisements, the arrangement between the hotel and the authorized
organization must be considered to determine whether the cooperative
mailing rule applies (see chapter 5).
Examples: Nonadvertising
Authorized organization O mails a letter soliciting donations. The letter
does not contain advertisements for products or services. Because
requests for donations are not considered advertisements, the
content-based restrictions for advertisements do not apply.
Authorized consumer organization XYZ mails a newsletter containing
an article that discusses the merits and prices of insurance policies
offered by companies O, P, Q, and R and lists telephone numbers at
the companies for obtaining more information. Companies O, P, Q, and
R do not pay organization XYZ or provide any other consideration for
the newsletter article. Because companies O, P, Q, and R did not pay
organization XYZ to publish the article, the article is not considered an
advertisement.
Authorized organization A's mailpiece contains a solicitation for
donations, with prize entry information and a notice that a product or
service need not be purchased to enter the drawing for the prize.
Because the recipient can enter the drawing without buying a product
or service, the solicitation is not considered an advertisement for the
prize.
Authorized organization E's mailpiece contains a solicitation for
donations, sweepstakes entry information, and an announcement that
the first 500 persons to return their sweepstakes entry form will receive
a set of steak knives. The recipient may enter the sweepstakes
regardless of whether he or she sends a donation. Because nothing is
sold, the request for a donation is not considered an advertisement.
Also, because the recipient is not required to make a donation to enter
the sweepstakes, the announcement of the sweepstakes and the knife
set is not considered an advertisement.
If an authorized organization solicits donations and announces that a
donation may be paid by credit card, the mention of payment by that
credit card is not considered an advertisement for the credit card unless
a third party (e.g., the firm issuing the credit card) gives the authorized
organization valuable consideration to mention the card. No
consideration has been paid for mentioning the credit card as a
payment option. Therefore, the reference is not advertising.
6-3.3.4.1 Front-End Premiums
A solicitation for a contribution or payment of membership dues announcing a
front-end premium is not considered to be an advertisement for the premium.
Example: Nonprofit organization A sends a solicitation to individuals seeking
donations. The solicitation includes a set of address labels and states: "The
enclosed labels are provided for you. Please use them regardless whether
you send a donation to our organization." This solicitation is not considered to
be an advertisement for the labels.
6-3.3.4.2 Back-End Premiums
A solicitation for a contribution or payment of membership dues that includes
an offer for a back end premium (e.g., "If you donate $100, we will send you a
free tote bag"), may be considered an advertisement for the premium unless
the membership dues or requested contribution is more than four times the
cost of the premiums offered and more than two times the represented value
in the mailpiece, if any, of the premiums offered.
As explained further in the discussion of steps 4-6, there are different
eligibility standards for advertisements based upon the specific product or
service advertised. It is important to consider the advertisement to determine
the product or service that is promoted.
If an advertisement generally promotes an advertiser's business, the
advertisement is considered to promote the company's full line of products
and services. In contrast, if the advertisement does not promote all the
advertiser's products or services but only specific products or services, the
advertisement is considered to promote only those specific products and
services.
Examples: Specific Advertised Products and Services
Clothing store P sells a wide range of clothes for men and boys. It
places an advertisement in a mailpiece mailed by the local Buddhist
temple stating: "Clothing store P has a large stock of saffron robes
starting at $50." This is considered to be solely an advertisement for
saffron robes, rather than for the store's full line of clothing. (NOTE: If
the advertisement also promotes clothing store P's general business
with a statement such as "Serving all your clothing needs since 1960," it
is considered to be an advertisement for P's full line of clothing.)
Supermarket S places an advertisement in a mailpiece of an authorized
Jewish synagogue stating only: "A full line of Passover foods is sold in
the store." This is considered to be an advertisement for the Passover
foods sold at the store, rather than an advertisement for all items sold
at the store.
A nonprofit organization's newsletter includes an advertisement for the
Acme insurance company stating only: "Call one of our certified
financial planners to discuss your future." This is considered to be an
advertisement for financial planning. If the advertisement consisted
solely of the name and telephone number of the Acme Insurance
Company, it would be considered an advertisement for all insurance
and other services available from the company.
A scientific organization's mailpiece includes an advertisement for the
ACME Travel Agency. The advertisement states, "Call us for
inexpensive flights to Europe." This is considered to be an
advertisement for air transportation only, rather than one for all of
ACME Travel Agency's services.
An authorized organization may advertise its periodical publication if it meets
certain statutory requirements (see 6-3.2), regardless of the products or
services advertised in the periodical publication. The publication itself may be
mailed at the nonprofit rates if it complies with the product restrictions, if it is
eligible for mailing as Standard Mail matter, and if it complies with the rules
for prohibited and restricted advertisements (if the publication contains
advertising).
Under the law, these materials are not considered advertising:
• References to membership benefits of an authorized nonprofit
organization (see 6-3.3.8).
• Acknowledgments of organizations or individuals who make donations
to the authorized organization (see 6-3.3.9).
• Public service announcements for which no consideration is received
(see 6-3.3.10).
References to and a response card or other instructions for making inquiries
about services or benefits available to members of the authorized
organization is permitted, provided that advertising, promotional, or
application material for such services or benefits is not included. (This
standard is sometimes referred to as the "permissible reference" rule.)
For the purposes of this provision, descriptions of membership benefits
available as a part of membership are permissible when they are included in
a letter soliciting new members or in a letter asking current members to
renew their membership as long as the descriptions constitute less than half
of the letter. The benefits described can include any product or service that
constitutes a membership benefit and the description may include contents
that might be considered advertising in other contexts, such as adjectives,
brand names, terms, conditions, and other material describing the product or
service.
Caution: With one limited exception, the membership benefits may be
described only in the solicitation letter or renewal request, and not in any
separate brochure, circular, flyer, or other document. Exception: when the
mailer prepares a single sheet describing the organization's membership
benefits, the sheet may be included in the mailpiece along with the letter
soliciting new members or membership renewals and considered to be part
of that letter as long as the letter does not describe the membership benefits
and only refers the reader to the separate sheet. (See CSRs PS-299 and
PS-304.)
A listing of sponsors, donors, or contributors is permissible and is a type of
acknowledgment. Such a listing is not considered advertising if:
• The listing of each individual or organization appears on a page under
a heading such as "sponsors," "contributors," "donors."
• The listing does not contain promotional material.
• The listing is not labeled as advertising nor are the individuals and firms
described as advertisers in other parts of the mailpiece.
A listing containing only the names of sponsors is not considered
promotional, but the inclusion of the address, telephone number, other
contact information, or additional information might be considered
promotional, depending on its content. For example, if the listing includes
such a line as "Acme Ice Cream Parlor, Our City's Favorite Ice Cream Parlor,"
the listing is considered an advertisement because the phrase "Our City's
Favorite Ice Cream Parlor" is promotional. The phrase "Acme Ice Cream
Parlor" is permissible if that is the name of the sponsor.
Public service announcements (PSAs) are commonly found in Nonprofit
Standard Mail material, especially periodical publications. These
announcements are not treated as advertising. PSAs are announcements for
which no valuable consideration is received by the publisher; which do not
include any matter related to the business interests of the publisher; and
which promote programs, activities, or services of federal, state, or local
governments or of nonprofit organizations, or matter generally regarded as in
the public interest.
Examples: Public Service Announcements
An authorized educational organization publishes this message in its
mailpiece: "There will be a political forum in auditorium G for all citizens
of county X. Come hear the candidates' points of view on topics that
affect you." Because no valuable consideration was paid, the message
is a public service announcement, not an advertisement.
Authorized organization B's mailpiece contains this statement: "Be
prepared for the unexpected. Authorized organization D sells an
automobile survival kit for $15." If organization B received no
consideration for publishing the statement, the statement is considered
a public service announcement, not an advertisement.
6-3.4 Step 4: Determine Prohibited or Restricted
Advertisements
Determine whether the mailpiece contains any prohibited or restricted
advertisements. Consider these three conditions and proceed as follows:
• If the mailpiece contains any prohibited advertisement (that is, for a
credit, debit, or charge card or similar financial instrument or account),
the mailpiece is ineligible for mailing at the nonprofit rates. Note: phone
cards; fare cards; financial planning services; stocks, bonds, and other
securities are examples of products and services not considered to be
financial instruments.
• If the mailpiece contains any restricted advertisement (that is, for an
insurance policy or travel arrangement), the mailpiece is ineligible for
mailing at the nonprofit rates unless the advertisement meets the
conditions described in this section.
• If the mailpiece contains no prohibited or ineligible restricted
advertisement but contains any other advertisements, go to step 5. If it
contains no prohibited or ineligible restricted advertisements and no
other advertisements, the content-based restrictions for advertisements
do not apply, and if there are no other problems such as noncompliance
with the cooperative mailing rule, the mailpiece is eligible for mailing at
the nonprofit rates.
Material that advertises, promotes, offers, or, for a fee or consideration,
recommends, describes, or announces the availability of any insurance policy is
ineligible for mailing at the nonprofit rates unless these three conditions are met:
• The organization promoting the policy is authorized to mail at the
nonprofit rates at the office of mailing.
• The policy is designed for and primarily promoted to the members,
donors, supporters, or beneficiaries of that organization.
• The coverage provided by the policy is not generally otherwise
commercially available.
Insurance is not considered to be generally otherwise commercially available
in the following circumstances:
• The solicitation is targeted at individuals for whom that type of coverage
is not available. Example: A mailing by a nonprofit organization offers
health care coverage in a mailing targeted at individuals who, due to
their age, health condition, or other reasons, cannot obtain health
insurance from any other source. Although health insurance is
considered to be generally otherwise commercially available in most
instances, it is not in this case since the targeted recipients cannot
obtain such insurance from another source. Accordingly, this mailing
does not violate the restriction against mailing insurance solicitations at
nonprofit rates.
• The solicitation is for a charitable gift annuity. (See CSR PS-294.)
• The coverage is provided by the nonprofit itself (e.g., a nonprofit
fraternal beneficiary society exempt from the payment of federal
income tax under section 501(c)(8)) that offers life insurance to its
members and is also the insurer).
• The coverage is provided or promoted by the nonprofit organization
(e.g., a 501(c)(3) nonprofit endowment) in a mailing to its members,
donors, supporters, or beneficiaries in such a way that the members,
donors, supporters, or beneficiaries may make tax-deductible donations
to the nonprofit organization of their proportional shares of any income
in excess of costs that the nonprofit organization receives from the
purchase of the coverage by its members, donors, supporters, or
beneficiaries.
Material that advertises, promotes, offers, or, for a fee or consideration,
recommends, describes, or announces the availability of any travel
arrangement is ineligible for mailing at the nonprofit rates unless these three
conditions are met:
• The organization promoting the arrangement is authorized to mail at
the nonprofit rates at the office of mailing.
• The arrangement is designed for and primarily promoted to the
members, donors, supporters, or beneficiaries of that organization.
• The travel contributes substantially - aside from the cultivation of
members, donors, or supporters or the acquisition of income or
funds - to one or more of the purposes that constitute the basis for the
organization's authorization to mail at the nonprofit rates.
6-3.4.3.1 Defining Travel Arrangements
The Postal Service does not consider an offering to involve a "travel
arrangement" unless it includes three elements: transportation,
accommodations, and a destination. The elements may be express or implied
in the advertisement. For example, an announcement for a three day
all-inclusive trip from New York to Las Vegas is considered a travel
arrangement since the destination is expressly stated, and the
accommodations and transportation implied. In contrast, an advertisement for
a hotel only or only for airline tickets is not considered to involve travel
arrangements since all three elements are not present. (See CSR PS-298.)
6-3.4.3.2 Entire Itinerary to Be Considered
In determining whether a travel arrangement contributes substantially to the
organization's purposes, the Postal Service does not limit its consideration to
the description of the travel arrangement that appears in the solicitation.
Rather, it considers the full itinerary and other relevant circumstances. (See
CSR PS-305.)
6-3.5 Step 5: Determine If Mailpiece Meets Content
Requirements for a Periodical Publication
Determine whether the mailpiece meets the content requirements for a
periodical publication. Consider these two conditions and proceed as follows:
• If the mailpiece meets the four content requirements for a periodical
publication (discussed in 6-3.5.2), the content-based restrictions for
advertisements discussed in step 6 do not apply. However, you must
consider whether the publication contains prohibited or ineligible
restricted advertisements as discussed in step 4.
• If the mailpiece does not meet the four content requirements for a
periodical publication, go to step 6.
To meet the content requirements for a periodical publication, the mailpiece
must:
• Have a title. The title must be printed on the front cover page in a style
and size of type that clearly distinguish the title from other information
on the front cover page.
• Be formed of printed sheets. (The publication may not be reproduced
by stencil, mimeograph, or hectograph processes; however,
reproduction by any other process is permitted.) Any style of type may
be used.
• Contain an identification statement on one of the first five pages of the
publication that includes these elements:
- Title.
- Issue date. The date may be omitted if it is on the front cover or
cover page.
- Statement of frequency showing when issues are to be published
(e.g., daily; weekly; monthly; monthly except June; three times a
year in June, August, and December; annually; irregularly).
- Name and address of the authorized organization, including street
number, street name, and ZIP+4® or five-digit ZIP Code™. The
street number and street name are optional if there is no letter
carrier service.
- Issue number. Every issue of each publication is numbered
consecutively in a series that may not be broken by assigning
numbers to issues omitted. The issue number may be printed on
the front cover or cover page instead of in the identification
statement.
- International Standard Serial Number (ISSN), if applicable.
- Subscription price, if applicable.
• Consist of at least 25 percent nonadvertising matter in each issue.
Example: Identification Statement
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Publication's title and number:
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CHURCH A WEEKLY BULLETIN (ISSN 1111111X)
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Issue date:
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JULY 10, 1995 (may be omitted if on the front cover or cover page)
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Statement of frequency:
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PUBLISHED WEEKLY
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Authorized organization's
name and address:
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CHURCH A
123 MAIN ST
WASHINGTON DC 20013-1111
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Issue number:
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ISSUE NO. 30 (may be omitted if on the front cover or cover page)
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Subscription price:
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(If applicable)
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The test in this exception (meeting the content requirements for a periodical
publication) is more liberal than the test required under:
• The product rules (see 6-3.2.2) for mailing periodical publications.
• The advertising rules (see 6-3.3) for advertising periodical publications.
That is, this exception requires that the mailpiece meet only the content
requirements for a periodical publication rather than all requirements
prescribed for a periodical publication.
For example, an organization's newsletter published three times a year does
not meet the requirements for a periodical publication. However, if the
newsletter meets the four requirements listed in 6-3.5.2 for "content
requirements for a periodical publication," the advertised products and
services in the newsletter do not have to be substantially related to the
authorized organization's purposes.
Example: Eligible Advertisements
Because authorized labor union X publishes its newsletter three times a
year, the newsletter does not meet the requirements for a periodical
publication. However, because the newsletter meets all four content
requirements for a periodical publication, the advertised products and
services (other than those for financial instruments, travel
arrangements, and insurance) in the newsletter do not have to be
substantially related to one or more of the authorized organization's
purposes, and the advertising restrictions do not apply.
6-3.6 Step 6: Determine Substantial Relatedness of
Advertised Products and Services
The "substantially related" standard does not apply to all mailings containing
advertisements.
• The "substantially related" standard does not apply to advertisements
for travel arrangements, insurance policies, and financial instruments.
(See step 4.)
• The "substantially related standard" does not apply to other
advertisements if the advertisement is part of material meeting the
"content requirements for a periodical." (See step 5.)
For each advertised product or service subject to the "substantially related"
standard, consider these two conditions:
• If all the products or services advertised in the mailpiece are
substantially related to one or more of the authorized organization's
purposes, the advertisements are eligible for mailing at the nonprofit
rates.
• If any product or service advertised in the mailpiece is not substantially
related to one or more of the authorized organization's purposes, the
mailpiece is ineligible for mailing at the nonprofit rates.
An organization's authorization is based on its primary purpose. Not all
purposes shown in the organizational documents may be considered as
qualifying purposes.
Except as set forth in 6-3.6.5, the determination whether a product or service
complies with the substantially related standard is generally based on
consideration of the nature of the product or service and qualifying purpose of
the nonprofit organization. By law, the determination whether a product or
service is substantially related to an organization's qualifying purpose is
based on provisions in the Internal Revenue Code and standards established
by the IRS and courts implementing those standards. If the organization is
subject to the payment of unrelated business income tax (UBIT) on a product
or service, it is not considered to be substantially related. However, the
product may not be substantially related even if the organization is not
subject to UBIT.
Since the determination whether a product or service is substantially related
to an organization's qualifying purposes is generally based upon nonpostal
law and nonprofit organizations should generally be familiar with this law in
order to fulfill their tax obligations, the Postal Service generally relies upon
nonprofit organizations to make the determination. Accordingly, where a
nonprofit certifies compliance with this requirement on its postage statement
the Postal Service will accept the mailing subject to appropriate measures if
the certification is erroneous. The Postal Service urges nonprofits to consult
with tax advisers or other appropriate parties as needed to ensure the
accuracy of their certifications.
Some advertising is considered substantially related to the organization's
purposes, regardless of the specific nature of the product or service.
Advertisements for products and services, including products and services
offered as prizes or premiums, are considered substantially related if the
products and services are received by the authorized organization as gifts or
contributions. Also, announcements of activities (e.g., bake sale, car wash,
charity auction, oratorical contest) are considered substantially related if
substantially all the work is conducted by the members or supporters of the
organization without compensation.
Example: Substantially Related Advertisements
Authorized veterans' organization V receives a donation of reading
glasses that the donor bought for $15 each pair. Organization V
includes one pair of the reading glasses in the mailpiece and an
advertisement stating that the organization has additional pairs of
reading glasses for sale at $20 each. Because the reading glasses
were a donation, they are considered substantially related to the
organization's purposes. The advertisement for the reading glasses is
thus eligible for mailing at the nonprofit rates. (The product rules must
be used to determine whether the reading glasses are eligible for
mailing at the nonprofit rates. In this case, the reading glasses are
eligible for mailing at the nonprofit rates because they were donated.)
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